Here are 3 pieces of Houston startup advice from Capital Factory's emerging tech panel
Throughout the year, Austin-based Capital Factory loads up a bus and takes startup founders and tech entrepreneurs around the Lone Star State in order to better connect the dots of innovation within Texas' major metros. The Texas Startup Manifesto bus recently put it in park outside Station Houston and hosted a tech-focused panel at Accenture's innovation hub.
The panel, which was hosted by two deep tech startup founders, asked some important questions about Houston's ecosystem and startup needs to three experts. Trevor Best of Syzygy Plasmontics and Diana Liu of Arix Technologies represented the startups, while Allison Sawyer of League of Worthwhile Ventures, Mark Volchec of Las Olas VC, and Brian Richards of Accenture fielded their questions.
The panel started out with the state of Houston's innovation ecosystem — which, of course, was the whole point of the one-day field trip to the Bayou City. The panelists seemed to agree that Houston has things it needs to improve on, but the point is not to try to copy any other market.
"We can't try to be Silicon Valley. We're just simply not," Richards says. "What we have to focus on is what our strengths are."
For instance, Houston has a lot of money within the city, but that hasn't yet translated to a large amount of investments in startups. Even if the city found $1 billion to start investing in companies, Richards says that wouldn't solve everything instantly. Houston has to be able work on the ecosystem as a whole, not just one thing in particular.
"We have so many problems to solve, and we have to solve them in parallel," Richards says. "We have to fix them all at once."
The city's ecosystem aside, the panel weighed in on some of their own advice for tech startups making waves in Houston.
Hire a business-minded leader, like, yesterday.
One of the most crucial aspect for any startup is the team behind the product, and having a diversity of expertise on that team is especially in tech startups, which are usually instigated by a tech-focused founder.
"I think it's really important to have a balanced founding team," Volchec says. "If everyone is tech, I think it's really difficult."
As a venture capitalist and former founder himself, Volchec's biggest critique is that, startups and founders don't start sales early enough. Volchec says he once signed a deal with a company before they even had a product let alone revenue. The key distinguisher for him was that the company already had contracts in place from customers.
Having that person to sell the company is so important, and you need a business-focused person at the helm to do so. For most companies, that's not the tech-minded founder.
"If you're the scientist, why do you even want to be the CEO?" Volchec asks. "The CEO's job is to be out there and selling — to investors, to clients, to employees."
According to the panelists, sooner is better for making that hire.
"if you don't hire a CEO, and you raise enough money, someone will hire a CEO for you, and you might not like that CEO," Volchec says.
Have a free discovery.
In particular, B-to-B companies should have a free trial, so to speak, for their product. It's Sawyer's pet peeve, she says, when startups charge for the discover process. It's strategic to give access to some people within the company your startup is trying to sell to, that way they get hooked and want to get more access for their whole team.
It does make the process a little more challenging, Sawyer says, since it requires a little more upfront funds.
"You do have to raise a little bit more money, but you do get to scale a lot faster," she says.
Corporate venture groups can be more than just investment.
When looking to scale your product into bigger corporations, a way in is through corporate venturing groups, according to the panelists, even if money isn't the right fit. You're more likely to get a meeting with a venture arm than with the company itself.
"I never took corporate venture money, because they were a little too slow and it was a lot of extra accounting work, Sawyer says. "But I loved working with corporate venture when it comes to pilots. I think they are an underused resource for startups."
It also helps that more and more companies are devoting resources to these groups.
"I'm seeing corporate venture groups all over the place," Sawyer says. "Even if you're not taking their money, they will get you in the door for a pilot."
Overall, big companies are more keen to work with startups of late, says Richards, who hosts C-level execs from big companies on a daily basis in Accenture's Innovation Hub.
"I've never seen [corporations] more motivated than they are right now to be able to think differently on how they are able to engage Houston," he says.